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Section 1.

Subd. 5.

Priority for C-BED projects.

(a) A utility subject to section 216B.1691that needs to construct new generation, or purchase the output from new generation, as part of its plan to satisfy deleted text beginits good faith objectivedeleted text endnew text beginthe standard new text endunder that section should take reasonable steps to determine if one or more C-BED projects are available that meet the utility's cost and reliability requirements, applying standard reliability criteria, to fulfill some or all of the identified need at minimal impact to customer rates.

Nothing in this section shall be construed to obligate a utility to enter into a power purchase agreement under a C-BED tariff developed under this section.

(b) Each utility shall include in its resource plan submitted under section 216B.2422a description of its efforts to purchase energy from C-BED projects, including a list of the projects under contract and the amount of C-BED energy purchased.

(c) The commission shall consider the efforts and activities of a utility to purchase energy from C-BED projects when evaluating its good faith effort towards meeting the renewable energy deleted text beginobjectivedeleted text endnew text begin standardnew text end under section 216B.1691.

Sec. 2.

Subdivision 1.

Commission authority.

Upon the petition of a public utility, the Public Utilities Commission shall approve or disapprove power purchase contracts, investments, or expenditures entered into or made by the utility to satisfy the wind and biomass mandates contained in sections deleted text begin216B.169,deleted text end216B.2423deleted text begin,deleted text end and 216B.2424, and to satisfy the renewable energy deleted text beginobjectivesdeleted text endnew text begin standardsnew text end set forth in section 216B.1691, including reasonable investments and expenditures made to:

(1) transmit the electricity generated from sources developed under those sections that is ultimately used to provide service to the utility's retail customers, including studies necessary to identify new transmission facilities needed to transmit electricity to Minnesota retail customers from generating facilities constructed to satisfy the renewable energy deleted text beginobjectivesdeleted text endnew text begin standardsnew text end, provided that the costs of the studies have not been recovered previously under existing tariffs and the utility has filed an application for a certificate of need or for certification as a priority project under section 216B.2425 for the new transmission facilities identified in the studies; or

(c) "Total retail electric sales" means the kilowatt-hours of electricity sold in a year by an electric utility to retail customers of the electric utility or to a distribution utility for distribution to the retail customers of the distribution utility.

Subd. 2.

(a) Each electric utility shall deleted text beginmake a good faith effort todeleted text end generate or procure sufficient electricity generated by deleted text beginan eligibledeleted text endnew text begina renewable new text endenergy technology to provide its retail consumers, or the retail customers of a distribution utility to which the electric utility provides wholesale electric service, so thatnew text begin at least the following percentages of the electric utility's total retail electric sales are generated by renewable energy technologies by the end of the year indicatednew text end:

new text begin(1) 2015 - 10 percentnew text end

new text begin(2) 2020 - 20 percentnew text end

deleted text begin(1) commencing in 2005, at least one percent of the electric utility's total retail electric sales is generated by eligible energy technologies;deleted text end

deleted text begin(2) the amount provided under clause (1) is increased by one percent of the utility's total retail electric sales each year until 2015; anddeleted text end

(b) deleted text beginOf the eligible energy technology generation required under paragraph (a), clauses (1) and (2), not less than 0.5 percent of the energy must be generated by biomass energy technologies, including an energy recovery facility used to capture the heat value of mixed municipal solid waste or refuse-derived fuel from mixed municipal solid waste as a primary fuel, by 2005. By 2010, one percent of the eligible technology generation required under paragraph (a), clauses (1) and (2), shall be generated by biomass energy technologies. An energy recovery facility used to capture the heat value of mixed municipal solid waste or refuse-derived fuel from mixed municipal solid waste, with a power sales agreement in effect as of May 29, 2003, that terminates after December 31, 2010, does not qualify as an eligible energy technology unless the agreement provides for rate adjustment in the event the facility qualifies as a renewable energy source.deleted text end

deleted text begin(c) By June 1, 2004, and as needed thereafter, the commission shall issue an order detailing the criteria and standards by which it will measure an electric utility's efforts to meet the renewable energy objectives of this section to determine whether the utility is making the required good faith effort. In this order,deleted text end The commission shall deleted text begininclude criteria and standards that protect againstdeleted text endnew text begindelay or modify the standard for an electric utility if it finds that compliance with a standard is not in the public interest because compliance:new text end

new text begin(1) will produce new text endundesirable impacts on the reliability of the utility's system deleted text beginanddeleted text endnew text begin;new text end

new text begin(3) is not feasible due to delays in acquiring, or due to rejection of, necessary siting or other permitting approvals;new text end

new text begin(4) is not feasible due to delays, cancellations, or nondelivery of necessary equipment for the construction or commercial operation of a renewable energy facility;new text end

new text begin(5) is not feasible due to transmission constraints preventing delivery of service; ornew text end

new text begin(6) is otherwise not technically feasiblenew text end.

deleted text begin(d) In its order under paragraph (c), the commission shall provide for a weighted scale of how energy produced by various eligible energy technologies shall count toward a utility's objective. In establishing this scale, the commission shall consider the attributes of various technologies and fuels, and shall establish a system that grants multiple credits toward the objectives for those technologies and fuels the commission determines is in the public interest to encourage.deleted text end

new text begin(c) The commission must accept findings of fact related to this subdivision, as determined and presented by the governing body of a generation and transmission cooperative association or municipal power agency or power district.new text end

Subd. 3.

Utility plans filed with commission.

(a) Each electric utility shall report on its deleted text beginplans, activities, and progressdeleted text endnew text begincompliance new text endwith regard to these deleted text beginobjectivesdeleted text endnew text beginstandards either new text endin its filings under section 216B.2422 or in a separate report submitted to the commission every two years, whichever is more frequent, demonstrating to the commission deleted text beginthatdeleted text end the deleted text beginutility is making the required good faithdeleted text endnew text beginutility's new text endeffortnew text begin to comply with this sectionnew text end. In its resource plan or a separate report, each electric utility shall provide a description of:

(b) The commissioner shall compile the information provided to the commission under paragraph (a), and report to the chairs of the house of representatives and senate committees with jurisdiction over energy and environment policy issues as to the progress of utilities in the state in increasing the amount of renewable energy provided to retail customers, with any recommendations for regulatory or legislative action, by January 15 of each odd-numbered year.

Subd. 4.

Renewable energy credits.

(a) To facilitate compliance with this section, the commission, by rule or order, deleted text beginmaydeleted text endnew text beginshall new text endestablish a program for tradable new text beginrenewable energy new text endcredits for electricity generated by deleted text beginan eligibledeleted text endnew text begina renewable new text endenergy technologynew text begin that treats all renewable energy equally, and shall do so no later than January 1, 2008new text end. In doing so, the commission shall implement a system that constrains or limits the cost of credits, taking care to ensure that such a system does not undermine the market for those credits.new text beginThe program shall treat all renewable energy technology equally and shall not give more or less credit to energy based on the state where the energy was generated or the technology with which the energy was generated. The program shall provide for the banking of unused credits to allow renewable energy generated in one year but not used to satisfy the standard in that same year to be carried forward to satisfy the mandate in future years.new text end

(b) In lieu of generating or procuring energy directly to satisfy the renewable energy deleted text beginobjectivedeleted text endnew text beginstandard new text endof this section, an electric utility may deleted text beginpurchase sufficient renewable energy credits, issued pursuant to this subdivision, to meet its objectivedeleted text endnew text begin utilize renewable energy credits issued pursuant to this subdivision. Each kilowatt-hour of renewable energy credits shall be treated the same as a kilowatt-hour of renewable energy generated or procured by an electric utilitynew text end.

(c) deleted text beginUpon the passage of a renewable energy standard, portfolio, or objective in a bordering state that includes a similar definition of eligible energy technology or renewable energy,deleted text end The commission deleted text beginmaydeleted text endnew text beginshall new text endfacilitate the trading of renewable energy credits between states.

new text begin(d) An electric supplier may only utilize renewable energy credits generated by an eligible energy technology if the credits were acquired after January 1, 2001, and the credits can be demonstrated to have been sold only once.new text end

Subd. 5.

(a) new text beginEnergy production that was mandated by Laws 1994, chapter 641, or by commission order issued under that chapter prior to August 1, 2001, does not apply toward an electric utility's requirement under this section.new text end

new text begin(b) To apply toward an electric utility's requirement under this section, energy must be generated by a facility located in the United States that was originally placed in service after January 1, 1975, unless the facility is a municipally owned hydroelectric plant in Minnesota that provides electricity only to a municipal system.new text end

new text begin(c) new text endElectricity produced by fuel combustion may only count toward a utility's deleted text beginobjectivesdeleted text endnew text beginstandard new text endif the generation facility:

(1) was constructed in compliance with new source performance standards promulgated under the federal Clean Air Act for a generation facility of that type; or

(2) employs the maximum achievable or best available control technology available for a generation facility of that type.

deleted text begin(b) An eligibledeleted text endnew text begin(d) A renewable new text endenergy technology may blend or co-fire a fuel listed in subdivision 1, paragraph (a), deleted text beginclause (1),deleted text end with other fuels in the generation facility, but only the percentage of electricity that is attributable to a fuel listed in that clause can be counted toward an electric utility's renewable energy deleted text beginobjectivesdeleted text endnew text begin standardnew text end.

Subd. 6.

Electric utility that owns nuclear generation facility.

(a) An electric utility that owns a nuclear generation facility, as part of its deleted text begingood faith effortdeleted text endnew text beginrequirement new text endunder this subdivision and subdivision 2, shall deploy an additional 300 megawatts of nameplate capacity of wind energy conversion systems by 2010, beyond the amount of wind energy capacity to which the utility is required by law or commission order as of May 1, 2003. At least 100 megawatts of this capacity are to be wind energy conversion systems of two megawatts or less, which shall not be eligible for the production incentive under section 216C.41. To the greatest extent technically feasible and economic, these 300 megawatts of wind energy capacity are to be distributed geographically throughout the state. The utility may opt to own, construct, and operate up to 100 megawatts of this wind energy capacity, except that the utility may not own, construct, or operate any of the facilities that are under two megawatts of nameplate capacity. The deployment of the wind energy capacity under this subdivision must be consistent with the outcome of the engineering study required under Laws 2003, First Special Session chapter 11, article 2, section 21.

(b) deleted text beginThe renewable energy objective set forth in subdivision 2 shall be a requirement for the public utility that owns the Prairie Island nuclear generation plant. The objective is a requirement subject to resource planning and least-cost planning requirements in section 216B.2422, unless implementation of the objective can reasonably be shown to jeopardize the reliability of the electric system. The least-cost planning analysis must include the costs of ancillary services and other necessary generation and transmission upgrades.deleted text end

deleted text begin(c)deleted text end Also as part of its deleted text begingood faith effortdeleted text endnew text beginrequirements new text endunder this section, the utility that owns a nuclear generation facility is to enter into a power purchase agreement by January 1, 2004, for ten to 20 megawatts of biomass energy and capacity at an all-inclusive price not to exceed $55 per megawatt-hour, for a project described in section 216B.2424, subdivision 5, paragraph (e), clause (2). The project must be operational and producing energy by June 30, 2005.

new text beginSubd. 7.new text end

new text beginCompliance.new text end

new text beginThe commission, on its own motion or upon petition, may investigate whether an electric supplier is in compliance with the standard under subdivisions 2 and 6. If the commission finds noncompliance it may order the electric supplier to construct facilities or purchase credits to achieve compliance. If an electric supplier fails to comply with an order under this subdivision, the commission may impose a financial penalty on the electric supplier in an amount up to the electric supplier's estimated cost of compliance, not to exceed the lesser of the cost to construct facilities or purchase credits.new text end

Sec. 4.

Subdivision 1.

Generation projects.

(a) Any municipality or rural electric association providing electric service and subject to section 216B.241 that is meeting the deleted text beginobjectivesdeleted text endnew text begin standardsnew text end under section 216B.1691 may, and each public utility may, use five percent of the total amount to be spent on energy conservation improvements under section 216B.241, on:

(1) projects in Minnesota to construct an electric generating facility that utilizes eligible renewable energy sources as defined in subdivision 2, such as methane or other combustible gases derived from the processing of plant or animal wastes, biomass fuels such as short-rotation woody or fibrous agricultural crops, or other renewable fuel, as its primary fuel source; or

(2) projects in Minnesota to install a distributed generation facility of ten megawatts or less of interconnected capacity that is fueled by natural gas, renewable fuels, or another similarly clean fuel.

(b) For public utilities, as defined under section 216B.02, subdivision 4, projects under this section must be considered energy conservation improvements as defined in section 216B.241. For cooperative electric associations and municipal utilities, projects under this section must be considered load-management activities described in section 216B.241, subdivision 1, paragraph (i).

Sec. 5.

Subd. 3.

Other provisions.

(a) Electricity generated by a facility constructed with funds provided under this section and using an eligible renewable energy source may be counted toward the renewable energy deleted text beginobjectivesdeleted text endnew text begin standardsnew text end in section 216B.1691, subject to the provisions of that section.

(b) Two or more entities may pool resources under this section to provide assistance jointly to proposed eligible renewable energy projects. The entities shall negotiate and agree among themselves for allocation of benefits associated with a project, such as the ability to count energy generated by a project toward a utility's renewable energy objectives under section 216B.1691. The entities shall provide a summary of the allocation of benefits to the commissioner. A utility may spend funds under this section for projects in Minnesota that are outside the service territory of the utility.

Subd. 2.

Large energy facility.

(1) new text begin"power plant" means new text endany electric power generating plant or combination of plants at a single site with a combined capacity of 50,000 kilowatts or more and transmission lines directly associated with the plant that are necessary to interconnect the plant to the transmission system;

(2) new text begin"high-voltage transmission line" means:new text end

new text begin(i) new text endany high-voltage transmission line with a capacity of 200 kilovolts or more and greater than 1,500 feet in lengthnew text begin, and associated transmission substationsnew text end;new text begin ornew text end

deleted text begin(3)deleted text endnew text begin (ii)new text end any high-voltage transmission line with a capacity of 100 kilovolts or more with more than ten miles of its length in Minnesota or that crosses a state linenew text begin, and associated transmission substationsnew text end;

new text begin(i) new text endany pipeline greater than six inches in diameter and having more than 50 miles of its length in Minnesota used for the transportation of coal, crude petroleum or petroleum fuels or oil, or their derivatives;new text begin ornew text end

deleted text begin(5)deleted text endnew text begin(ii) new text endany pipeline for transporting natural or synthetic gas at pressures in excess of 200 pounds per square inch with more than 50 miles of its length in Minnesota;

deleted text begin(9)deleted text endnew text begin(6) new text endany facility intended to convert any material into any other combustible fuel and having the capacity to process in excess of 75 tons of the material per hour.

Sec. 7.

Subdivision 1.

Definitions.

(a) For purposes of this section, the terms defined in this subdivision have the meanings given them.

(b) "Utility" means an entity with the capability of generating 100,000 kilowatts or more of electric power and serving, either directly or indirectly, the needs of 10,000 retail customers in Minnesota. Utility does not include federal power agencies.

(c) deleted text begin"Renewable energy" means electricity generated through use of any of the following resources:deleted text end

deleted text begin(1) wind;deleted text end

deleted text begin(2) solar;deleted text end

deleted text begin(3) geothermal;deleted text end

deleted text begin(4) hydro;deleted text end

deleted text begin(5) trees or other vegetation; ordeleted text end

deleted text begin(6) landfill gas.deleted text end

deleted text begin(d)deleted text end "Resource plan" means a set of resource options that a utility could use to meet the service needs of its customers over a forecast period, including an explanation of the supply and demand circumstances under which, and the extent to which, each resource option would be used to meet those service needs. These resource options include using, refurbishing, and constructing utility plant and equipment, buying power generated by other entities, controlling customer loads, and implementing customer energy conservation.

Subd. 2.

Resource plan filing and approval.

A utility shall file a resource plan with the commission periodically in accordance with rules adopted by the commission. The commission shall approve, reject, or modify the plan of a public utility, as defined in section 216B.02, subdivision 4, consistent with the public interest. In the resource plan proceedings of all other utilities, the commission's order shall be advisory and the order's findings and conclusions shall constitute prima facie evidence which may be rebutted by substantial evidence in all other proceedings. With respect to utilities other than those defined in section 216B.02, subdivision 4, the commission shall consider the filing requirements and decisions in any comparable proceedings in another jurisdiction.deleted text beginAs a part of its resource plan filing, a utility shall include the least cost plan for meeting 50 and 75 percent of all new and refurbished capacity needs through a combination of conservation and renewable energy resources.deleted text end

Subd. 2a.

Historical data and advance forecast.

Each utility required to file a resource plan under this section shall include in the filing all applicable annual information required by section 216C.17, subdivision 2, and the rules adopted under that section. To the extent that a utility complies with this subdivision, it is not required to file annual advance forecasts with the department under section 216C.17, subdivision 2.

Subd. 3.

Environmental costs.

(a) The commission shall, to the extent practicable, quantify and establish a range of environmental costs associated with each method of electricity generation. A utility shall use the values established by the commission in conjunction with other external factors, including socioeconomic costs, when evaluating and selecting resource options in all proceedings before the commission, including resource plan and certificate of need proceedings.

(b) The commission shall establish interim environmental cost values associated with each method of electricity generation by March 1, 1994. These values expire on the date the commission establishes environmental cost values under paragraph (a).

deleted text beginSubd. 4.deleted text end

deleted text beginThe commission shall not approve a new or refurbished nonrenewable energy facility in an integrated resource plan or a certificate of need, pursuant to section deleted text begin216B.243deleted text end, nor shall the commission allow rate recovery pursuant to section deleted text begin216B.16deleted text end for such a nonrenewable energy facility, unless the utility has demonstrated that a renewable energy facility is not in the public interest. deleted text end

Subd. 5.

Bidding; exemption from certificate of need proceeding.

(a) A utility may select resources to meet its projected energy demand through a bidding process approved or established by the commission. A utility shall use the environmental cost estimates determined under subdivision 3 in evaluating bids submitted in a process established under this subdivision.

(b) Notwithstanding any other provision of this section, if deleted text beginan electricdeleted text endnew text begina new text endpower deleted text begingeneratingdeleted text end plant, as described in section 216B.2421, subdivision 2, clause (1), is selected in a bidding process approved or established by the commission, a certificate of need proceeding under section 216B.243 is not required.

(c) A certificate of need proceeding is also not required for deleted text beginan electricdeleted text endnew text begina new text endpower deleted text begingeneratingdeleted text end plant that has been selected in a bidding process approved or established by the commission, or such other selection process approved by the commission, to satisfy, in whole or in part, the wind power mandate of section 216B.2423 or the biomass mandate of section 216B.2424.

Subd. 6.

Consolidation of resource planning and certificate of need.

A utility shall indicate in its resource plan whether it intends to site or construct a deleted text beginlarge energy facilitydeleted text endnew text begin power plantnew text end. If the utility's resource plan includes a proposed deleted text beginlarge energy facilitydeleted text endnew text beginpower plant new text endand construction of that facility is likely to begin before the utility files its next resource plan, the commission shall conduct the resource plan proceeding consistent with the requirements of section 216B.243 with respect to the proposed facility. If the commission approves the proposed facility in the resource plan, a separate certificate of need proceeding is not required.

Sec. 8.

Subd. 7.

Transmission needed to support renewable resources.

(a) Each entity subject to this section shall determine necessary transmission upgrades to support development of renewable energy resources required to meet deleted text beginobjectivesdeleted text endnew text begin standardsnew text end under section 216B.1691 and shall include those upgrades in its report under subdivision 2.

(b) Transmission projects determined by the commission to be necessary to deleted text beginsupportdeleted text endnew text beginfacilitate new text enda utility's deleted text beginplan underdeleted text endnew text begincompliance with new text endsection 216B.1691deleted text beginto meet its obligations under that sectiondeleted text end must be certified as a priority electric transmission project, satisfying the requirements of section 216B.243. In determining that a proposed transmission project is necessary to deleted text beginsupportdeleted text endnew text beginfacilitate new text enda utility's deleted text beginplan underdeleted text endnew text begincompliance with new text endsection 216B.1691, the commission must find that the applicant has met the following factors:

(1) that the transmission facility is necessary to allow the delivery of power from renewable sources of energy to retail customers in Minnesota;

(2) deleted text beginthat the applicant has signed or will sign power purchase agreements, subject to commission approval, for resources to meet the renewable energy objective that are dependent upon or will use the capacity of the transmission facility to serve retail customers in Minnesota;deleted text end

deleted text begin(3)deleted text end that the installation and commercial operation date of the renewable resources to satisfy the renewable energy deleted text beginobjectivedeleted text endnew text beginstandard new text endwill match the planned in-service date of the transmission facility; and

Sec. 9.

Minnesota Statutes 2006, section 216B.2426, is amended to read:

216B.2426 OPPORTUNITIES FOR DISTRIBUTED GENERATION.

The commission shall ensure that opportunities for the installation of distributed generationdeleted text begin, as that term is defined in section 216B.169, subdivision 1, paragraph (c),deleted text end are considered in any proceeding under section 216B.2422, 216B.2425, or 216B.243.

Sec. 10.

Minnesota Statutes 2006, section 216B.243, is amended to read:

216B.243 CERTIFICATE OF NEED FOR LARGE ENERGY FACILITY.

Subdivision 1.

Assessment of need criteria.

The commission shall, pursuant to chapter 14 and sections 216C.05 to 216C.30 and this section, adopt assessment of need criteria to be used in the determination of need for large energy facilities pursuant to this section.

Subd. 2.

Certificate required.

No large energy facility shall be sited or constructed in Minnesota without the issuance of a certificate of need by the commission pursuant to sections 216C.05 to 216C.30 and this section and consistent with the criteria for assessment of need.

Subd. 3.

No proposed large energy facilitynew text begin, as defined in section 216B.2421, subdivision 2, clauses (3) to (6),new text endshall be certified for construction deleted text beginunless the applicant can show that demand for electricity cannot be met more cost effectively through energy conservation and load-management measures anddeleted text end unless the applicant has deleted text beginotherwisedeleted text end justified its need. In assessing need, the commission shall evaluate:

(1) the accuracy of the long-range energy demand forecasts on which the necessity for the facility is based;

(2) the effect of existing or possible energy conservation programs under sections 216C.05 to 216C.30 and this section or other federal or state legislation on long-term energy demand;

(3) the relationship of the proposed facility to overall state energy needs, as described in the most recent state energy policy and conservation report prepared under section 216C.18deleted text begin, or, in the case of a high-voltage transmission line, the relationship of the proposed line to regional energy needs, as presented in the transmission plan submitted under section 216B.2425deleted text end;

(4) deleted text beginpromotional activities that may have given rise to the demand for this facility;deleted text end

deleted text begin(5)deleted text end benefits of this facility, including its uses to protect or enhance environmental quality, and to increase reliability of energy supply in Minnesota and the region;

deleted text begin(7)deleted text endnew text begin(6) new text endthe policies, rules, and regulations of other state and federal agencies and local governments;new text begin andnew text end

deleted text begin(8)deleted text endnew text begin(7) new text endany feasible combination of energy conservation improvements, required under section 216B.241, that can (i) replace part or all of the energy to be provided by the proposed facility, and (ii) compete with it economicallydeleted text begin;deleted text endnew text begin.new text end

deleted text begin(9) with respect to a high-voltage transmission line, the benefits of enhanced regional reliability, access, or deliverability to the extent these factors improve the robustness of the transmission system or lower costs for electric consumers in Minnesota;deleted text end

deleted text begin(11) whether the applicant has made the demonstrations required under subdivision 3a; anddeleted text end

deleted text begin(12) if the applicant is proposing a nonrenewable generating plant, the applicant's assessment of the risk of environmental costs and regulation on that proposed facility over the expected useful life of the plant, including a proposed means of allocating costs associated with that risk.deleted text end

deleted text beginSubd. 3a.deleted text end

deleted text beginUse of renewable resource.deleted text end

deleted text beginThe commission may not issue a certificate of need under this section for a large energy facility that generates electric power by means of a nonrenewable energy source, or that transmits electric power generated by means of a nonrenewable energy source, unless the applicant for the certificate has demonstrated to the commission's satisfaction that it has explored the possibility of generating power by means of renewable energy sources and has demonstrated that the alternative selected is less expensive (including environmental costs) than power generated by a renewable energy source. For purposes of this subdivision, "renewable energy source" includes hydro, wind, solar, and geothermal energy and the use of trees or other vegetation as fuel.deleted text end

Subd. 3b.

Nuclear power plant; new construction prohibited; relicensing.

(a) The commission may not issue a certificate of need for the construction of a new nuclear-powered electric generating plant.

(b) Any certificate of need for additional storage of spent nuclear fuel for a facility seeking a license extension shall address the impacts of continued operations over the period for which approval is sought.

new text beginSubd. 3c.new text end

new text beginShowing required for construction of power plant.new text end

new text beginNo proposed power plant, as defined in section 216B.2421, subdivision 2, clause (1), shall be certified for construction unless the applicant can show that demand for electricity cannot be met more cost effectively through energy conservation and load-management measures and unless the applicant has otherwise justified its need. In assessing need, the commission shall evaluate:new text end

new text begin(1) the accuracy of the long-range energy demand forecasts on which the necessity for the facility is based;new text end

new text begin(2) the effect of existing or possible energy conservation programs under sections 216C.05 to 216C.30, and this section or other federal or state legislation on long-term energy demand;new text end

new text begin(3) the relationship of the proposed facility to overall state energy needs, as described in the most recent state energy policy and conservation report prepared under section 216C.18;new text end

new text begin(4) benefits of the facility, including its uses to protect or enhance environmental quality, and to increase reliability of energy supply in Minnesota and the region; andnew text end

new text begin(5) possible alternatives for satisfying the energy demand including, but not limited to, potential for increased efficiency and upgrading of existing energy generation and transmission facilities, load-management programs, and distributed generation.new text end

new text beginSubd. 3d.new text end

new text beginShowing required for construction of high-voltage transmission line.new text end

new text begin(1) the relationship of the proposed line to regional energy needs, as presented in the transmission plan submitted under section 216B.2425;new text end

new text begin(2) possible alternatives for satisfying the transmission needs, including, but not limited to, potential for upgrading existing transmission facilities;new text end

new text begin(3) the benefits of the facility, including its uses to protect or enhance environmental quality and to increase reliability of energy supply in Minnesota and the region;new text end

new text begin(4) the benefits of enhanced regional reliability, access, or deliverability to the extent these factors improve the robustness of the transmission system or lower costs for electric consumers in Minnesota;new text end

new text begin(5) whether the applicant or applicants have filed, or will file by a date certain, an application for certification as a priority electric transmission project under section 216B.2425 for any transmission facilities or upgrades identified under section 216B.2425, subdivision 7; andnew text end

new text begin(6) the commission may not make its determination of need for a new, or need for upgrade of an existing, high-voltage transmission line based on the nature or character of the source of the electric power that will be transmitted over the proposed line or lines.new text end

Subd. 4.

Application for certificate; hearing.

Any person proposing to construct a large energy facility shall apply for a certificate of need and for a site or route permit under chapter 216E prior to construction of the facility. The application shall be on forms and in a manner established by the commission. In reviewing each application the commission shall hold at least one public hearing pursuant to chapter 14. The public hearing shall be held at a location and hour reasonably calculated to be convenient for the public. An objective of the public hearing shall be to obtain public opinion on the necessity of granting a certificate of need and, if a joint hearing is held, a site or route permit. The commission shall designate a commission employee whose duty shall be to facilitate citizen participation in the hearing process. Unless the commission determines that a joint hearing on siting and need under this subdivision and section 216E.03, subdivision 6, is not feasible or more efficient, or otherwise not in the public interest, a joint hearing under those subdivisions shall be held.

Subd. 5.

Approval, denial, or modification.

new text begin(a) new text endWithin 12 months of the submission of an application, the commission shall approve or deny a certificate of need for the facility. Approval or denial of the certificate shall be accompanied by a statement of the reasons for the decision. Issuance of the certificate may be made contingent upon modifications required by the commission. If the commission has not issued an order on the application within the 12 months provided, the commission may extend the time period upon receiving the consent of the parties deleted text beginor on its own motion, for good cause, by issuing an order explaining the good cause justification for extensiondeleted text end.

new text begin(b) The commission shall compile an annual report on their workload in relationship to applications for certificates of need during the previous calendar year, including the number of applications filed, the number pending at the beginning and at the end of the calendar year, the nature of the applications, whether each application has been approved, denied, or modified, and the status of each application that remains pending at the end of the calendar year. The report shall identify whether the commission has acted on each application within the 12 months provided. For each application that has not been acted upon within the required 12-month period, the commission shall provide a description of the reason for the delay. The commission shall provide the report annually to the chairs of the committees of the house of representatives and the senate with jurisdiction over energy matters by January 31 of each year.new text end

Subd. 6.

Application fees; rules.

Any application for a certificate of need shall be accompanied by the application fee required pursuant to this subdivision. The application fee is to be applied toward the total costs reasonably necessary to complete the evaluation of need for the proposed facility. The maximum application fee deleted text beginshall bedeleted text endnew text begin isnew text end $50,000, except for an application for deleted text beginan electricdeleted text endnew text begina new text endpower deleted text begingeneratingdeleted text end plantnew text begin,new text end as defined in section 216B.2421, subdivision 2, clause (1), or a high-voltage transmission linenew text begin,new text end as defined in section 216B.2421, subdivision 2, clause (2), for which the maximum application fee deleted text beginshall bedeleted text endnew text begin isnew text end $100,000. Costs exceeding the application fee and reasonably necessary to complete the evaluation of need for the proposed facility shall be recovered from the applicant. If the applicant is a public utility, a cooperative electric association, a generation and transmission cooperative electric association, a municipal power agency, a municipal electric utility, or a transmission company, the recovery shall be done pursuant to section 216B.62. The commission shall establish by rule pursuant to chapter 14 and sections 216C.05 to 216C.30 and this section, a schedule of fees based on the output or capacity of the facility and the difficulty of assessment of need. Money collected in this manner shall be credited to the general fund of the state treasury.

Subd. 7.

Participation by other agency or political subdivision.

(a) Other state agencies authorized to issue permits for siting, constructionnew text begin,new text end or operation of large energy facilities, and those state agencies authorized to participate in matters before the commission involving utility rates and adequacy of utility services, shall present their position regarding need and participate in the public hearing process prior to the issuance or denial of a certificate of need. Issuance or denial of certificates of need shall be the sole and exclusive prerogative of the commission and these determinations and certificates shall be binding upon other state departments and agencies, regional, county, and local governments and special purpose government districts except as provided in sections 116C.01 to 116C.08 and 116D.04, subdivision 9.

(b) An applicant for a certificate of need shall notify the commissioner of agriculture if the proposed project will impact cultivated agricultural land, as that term is defined in section 216G.01, subdivision 4. The commissioner may participate in any proceeding on the application and advise the commission as to whether to grant the certificate of need, and the best options for mitigating adverse impacts to agricultural lands if the certificate is granted. The Department of Agriculture shall be the lead agency on the development of any agricultural mitigation plan required for the project.

Subd. 8.

Exemptions.

This section does not apply to:

(1) cogeneration or small power production facilities as defined in the Federal Power Act, United States Code, title 16, section 796, paragraph (17), subparagraph (A), and paragraph (18), subparagraph (A), and having a combined capacity at a single site of less than 80,000 kilowatts; plants or facilities for the production of ethanol or fuel alcohol; or any case where the commission has determined after being advised by the attorney general that its application has been preempted by federal law;

(2) a high-voltage transmission line proposed primarily to distribute electricity to serve the demand of a single customer at a single location, unless the applicant opts to request that the commission determine need under this section or section 216B.2425;

(3) the upgrade to a higher voltage of an existing transmission line that serves the demand of a single customer that primarily uses existing rights-of-way, unless the applicant opts to request that the commission determine need under this section or section 216B.2425;

(4) a high-voltage transmission line of one mile or less required to connect a new or upgraded substation to an existing, new, or upgraded high-voltage transmission line;

(6) the modification of an existing deleted text beginelectric generatingdeleted text endnew text beginpower new text endplant to increase efficiency, as long as the capacity of the plant is not increased more than ten percent or more than 100 megawatts, whichever is greater; or

(7) a large energy facility that (i) generates electricity from wind energy conversion systems, (ii) will servenew text begin, directly or indirectly,new text end retail customers in Minnesota, new text beginand new text end(iii) is specifically intended to deleted text beginbe used to meet the renewable energy objective under section 216B.1691 or addressesdeleted text endnew text beginaddress new text enda resource need identified in a current commission-approved or commission-reviewed resource plan under section 216B.2422deleted text begin, and (iv) derives at least ten percent of the total nameplate capacity of the proposed project from one or more C-BED projects, as defined under section 216B.1612, subdivision 2, paragraph (f)deleted text end.

Sec. 11.

Minnesota Statutes 2006, section 216C.053, is amended to read:

216C.053 RENEWABLE ENERGY DEVELOPMENT.

The commissioner of commerce must engage in activities to encourage deployment of cost-effective renewable energy developments within the state. The commissioner shall compile and maintain information concerning existing and potential renewable energy developments and resources in the state. deleted text beginThe commissioner shall provide, as appropriate, this information in proceedings for the determination of need for large energy facilities and for the review of a utility's integrated resource plan.deleted text end To the extent practicable, and in addition to any other obligation of an electric utility to furnish information, an electric utility seeking to add generation to its supply portfolio to serve Minnesota consumers shall provide the commissioner with notice of its intention.

Sec. 12.

Minnesota Statutes 2006, section 216C.315, is amended to read:

216C.315 ALTERNATIVE ENERGY ECONOMIC ANALYSIS.

The commissioner shall carry out the following energy economic analysis duties:

(1) provide continued analysis of alternative energy issues for the biennial reportdeleted text begin, certificates of need,deleted text end and legislative requests;

(2) provide alternative energy information to consumers and business;

(3) assist in the maintenance and improvement of alternative energy input-output multipliers and market penetration models;

(4) provide analysis of alternative energy data.

Sec. 13.

Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision to read:

new text beginSubd. 85.new text end

new text beginNotwithstanding subdivision 9, clause (a), each high-voltage transmission line, as defined in section 216B.2421, subdivision 2, clause (2), and its associated transmission substations, the construction of which is commenced on or after January 1, 2007, is exempt for the first taxable year after the line or substation is initially placed in service, and property taxes as otherwise determined by law on the transmission line and its associated transmission substations must be reduced by:new text end

new text begin(1) 75 percent for the second taxable year of operation of the transmission line;new text end

new text begin(2) 50 percent for the third taxable year of operation of the transmission line; andnew text end

new text begin(3) 25 percent for the fourth taxable year of operation of the transmission line.new text end

new text beginAfter the fourth taxable year of operation of the transmission line and associated transmission substations, the transmission line and its associated transmission substations are taxed in compliance with chapter 272.new text end

new text beginFor purposes of this subdivision, "initially placed in service" includes both new construction and substantial expansion of the carrying capacity of a preexisting line. "Substantial expansion" means an increase in carrying capacity of 50 percent or more.new text end

Sec. 14. new text begin REPEALER.new text end

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